Private Equity Spotlight: Synergy in Action – Ami Mehta & Joe McIlhattan at Periscope Equity

[00:00:00] Sean Mooney: Welcome to the Karma School of Business, a podcast about the private equity industry, business best practices, and real time trends. I'm Sean Mooney, BluWave’s founder and CEO. In this episode, we have an amazing conversation with Ami Mehta and Joe McIlhattan. With Periscope equity, enjoy.
I am very excited to have a conversation with two amazing private equity team members who are members of one of the top private equity and most innovative private equity firms of the year, Joe and Ami. Thanks for meeting us today.

[00:00:50] Joe McIlhattan: Thank you, Sean.

[00:00:51] Ami Metha: Excited to be here. Thanks for inviting us.

[00:00:53] Joe McIlhattan: Yeah, glad to be here.

[00:00:55] Sean Mooney: So we have the privilege of working with Joe and Ami. Joe had the major, I wouldn't say it was a privilege, but he had the misfortune of working with me in a prior life directly. So we've already extended my apologies for experiences of past and he's gotten over and he said, he forgives me.

[00:01:11] Joe McIlhattan: I know I'm going to have to sneak in a few of those stories at some point here.
I'll wait for the right prompt though.

[00:01:17] Sean Mooney: So this is great having everyone here. It's really fun when you can particularly have a couple people. From the same firm. And what I think is really great about this conversation that we're having today is we have a team member from both the deal side and the upside.
And so one of the biggest, and I think most important evolutions in private equity has been this symphony of motion that occurs. Between the deal and the ops teams really forming a greater whole and bringing this perspective, from diligence all the way through value creation. And so this is, I think, going to be a very interesting conversation for anyone interested in private equity, whether you're in it or joining it, or you're thinking about becoming part of the industry.
So thanks for joining. Let's have some fun.

[00:01:57] Joe McIlhattan: Sounds good.

[00:01:58] Sean Mooney: All right. So maybe to kick things off, it's always good to get a little bit of the backstory. And to start off, Joe, since I've known you the longest, even though I feel like I'm probably even more privileged to know Ami, but that's, that's a whole different story.
I'd love to get, your story, even though I know it, but our listeners don't. So let's hear a bit of you.

[00:02:17] Joe McIlhattan: Absolutely. First Chicagoan, went out to the East coast to Georgetown for undergrad. Sean, where I learned about the world of finance for the first time. And despite starting my career in consulting, I knew I always wanted to kind of go into private equity where I could work with smaller businesses and lend that consulting skillset to them with some skin in the game.
I think is a lot of private equity investors do. I got my first chance to work in the industry from one of the legends of private equity, Sean Moody himself. And since then have been in the industry ever since. I made my way to Periscope Equity here in Chicago, where I've had the great privilege of working alongside Ami in the tech enabled services space.

[00:02:58] Sean Mooney: That's wonderful. Ami, how about yourself? Tell us a little bit about you.

[00:03:01] Ami Metha: Yeah, like Joe, lifelong Chicagoan as well. We as Periscopers have that in common here. Strong Midwest roots on our team. Grew up here in Chicago and started my career at E& Y as an auditor. So, it was really first exposed to PE when I had these stacks of closing binders to audit that landed on my desk and these really exciting, glamorous transactions of places like where we office now, One North Wacker and developments like that.
And I thought, wow, this would be cool to actually move up cycle and be part of these motions, be part of these transactions. So that was sort of my first interest and exposure to PE. And of course, kind of digging your way out of being an auditor is a bit of a challenge after you've been there for, a loyal person.
So stayed for about four and a half years doing that work had a great team there. But made my way also to the East coast for school, to Harvard for my MBA. With the intention of being in PE coming out of business school, had to make my round through banking. So I was with Goldman for my internship, but then leveraged our HBS network to join a Chicago based private equity fund, focused on commercial real estate as well.
That was kind of the pathway in to the industry after business school. So I've been in PE since 2007 and started as an investor. So as Joe kind of had his migration over to PE, my migration has been from moving as an investor and moving into a value creation, but also moving industries. Right.
So the first entry point to value creation was sort of full cycle investing from entry through value creation through exit. And through those motions, really found that my passion point was that middle period, the growth, and knew that that was where my career belonged in P. E., and it was kind of about finding the pathways to kind of anchor in terms of sector focus, a fund that really viewed this aspect of P.
E. as core to the process, and here I am, five years into my role, leading operations at Periscope.

[00:05:09] Sean Mooney: I think that it's a really interesting kind of juxtaposition with both of you, how you've kind of ended up in PE. And in some ways it shows the many different ways that people are coming into the industry.
And so Joe, you started in consulting and then very often that's a pathway into more of the operational roles. Yeah. And then, Ami, you started in kind of the audit and the finance side and ended up on the operations side. I think it's a great reflection of the industry today, because it used to be kind of these linear paths, and now you have people kind of going every which way.
So, Ami, I'd be curious, as you were thinking through this, you're on the deals side, what drew you to the ops side and how did you make that jump?

[00:05:49] Ami Metha: Yeah, that's a great question. I think to be totally honest, it was just exposure. I think that a lot of funds are structured in these sort of functional silos, like acquisitions, asset management, is my fund, my prior fund was structured, but they restructured our teams to be more asset focused.
And really, it's that cradle to grave process that each deal lead would own. And so the work that gets done in the middle was an area that you sometimes don't have exposure to, but I had the blessing of having exposure to it and running all of those processes. So I found myself doing things like building our annual plans, hands on things like sitting on community boards, being in commercial real estate.
If you're familiar with Long Grove, I was on that board for a while and sourcing tenants. And the relationship dynamic and connecting the return. We wanted to realize with the activities we needed to conduct in each of our investments. That was my sweet spot and what I was having the most fun with. But I think that anchor of the finance kind of foundation helps you connect those dots.
So I feel like that foundation has really helped throughout the course, even though I'm focusing in on the value creation side is something through exposure. I was able to learn was, was where I was, should have been focused.

[00:07:11] Sean Mooney: And that makes complete sense. And Joe, how about you? How did you kind of think through that?

[00:07:14] Joe McIlhattan: Absolutely. And I think it's only a certain flavor of private equity that I think lends itself to wearing both hats at different times. And it's in this kind of lower middle market, usually technology oriented businesses that warrant just a certain, nuance in their value creation plans or certain fundamental business building activities that allows for maybe the broader skill set to be applicable.
I frequently find myself tapping into my former consulting skill set and rolling up my sleeves and problem solving alongside Ami or executive team members to try and meet a problem in the market or in the firm head on. I find it very rewarding.

[00:07:53] Sean Mooney: It was interesting when Joe and I worked together. We worked at a private equity firm that.
It was probably a little bit different in that it was very much more of the, if you looked at the proportion of people, they very much more so came from consulting and I was a bit of the odd duck that came from investment banking. And I could dazzle everyone with my Excel skills, but they were much better at everything else.
And so I was playing with one arm, tied behind my back, but boy, could I whip out a model really quickly.

[00:08:22] Ami Metha: And those models are necessary, you know,

[00:08:24] Sean Mooney: yeah, Ami, you and I are simpatico. We know these things. Let's not give Joe too much credit. So maybe to kind of flip the page here, I'm interested in kind of your perspectives on businesses.
And you know, both of you have been in the industry for a long time. You've seen hundreds developed and one of the things at least when I was in the industry, I kind of developed a personal yardstick about this is what traits should be resident in a good company or at least could or will be in a company that will make it from take it from good to great.
Joe, it would be wonderful to hear what is your perspective on what are you looking for in a company? And by designing it, what should executives who someday aspire to work in this ecosystem probably also think about.

[00:09:08] Joe McIlhattan: For sure, and especially within the tech enabled services context where we focus, it's a little bit different than maybe more vertical oriented firms where they're always looking at a health care business or a marketing business or an industrials firm.
We see a lot more patterns and business models. And so when we look at those kind of professional services or managed services that have a technology element, we're really focused on strong value propositions where we can see, something that's durable has a tangible R. O. I. Is repeatable and every time it delivers to the customer, they know that they're getting a value on the service they're purchasing.
And beyond that, we're focused on the team, as many private equity firms will probably resonate with. We don't need a full executive team day one, but we do need people we can rely on to keep the business moving forward. And it really helps to have a strong bench of junior talent that you can count on for that future growth.
It's really hard to work from scratch. And if that's the durability side, that's kind of the check the box, make sure that the return is going to be stable. On the upside, we're really focused on the talent engine and the potential for technology. I can let Ami expand on, on both of those.

[00:10:24] Ami Metha: This is an area that the rationale for being at Periscope is, having the opportunity to collaborate around these kind of discussions, right?
And so from a talent engine perspective, that can be executive level, and building and understanding who our team is, at the platform in current state. What are the goals for our founder, CEO? Sometimes it's not maintaining that role. What are the capability sets? How do we build around that founder, CEO and match that build to our thesis that we articulated and have come up with in understanding the platform?
So it's both executive and it's also, these are people driven businesses. So as Joe mentioned, the durability of understanding how the workflows work inside the companies. Where do we have single-threaded liabilities? Where do we need to expand our investment in our people, whether it be a process perspective, a particular sector of focus, a particular capability.
So we'll look to kind of sharpen the pencils around that early on. From a tech enablement perspective, it comes in a variety of flavors and the type of businesses we invest in. These are not software businesses where there's an active product roadmap or one that needs to be developed and you invest in that and off you go.
We deploy modern digital transformation. The elements of that are infrastructure, boring things like ERP systems, any other systems that we need to bring on that ties into the scalability and durability of our assets, things around customer experience and CX, those kinds of investments are important to develop from a technology perspective.
Exciting areas of automation, although I will say the automation realities inside our businesses are not sometimes the most forefront of AI, right? They're more taking large stacks of paper, as we have at a few of our businesses, and automating certain elements or very critical areas that alleviate workload, that create more efficiency, and things like that.
We talk a lot about data and insights, how do we use data from an internal perspective to drive performance? And that represents itself in metrics and KPIs, but also from a customer facing perspective. How do we demonstrate our value to our customers from a data perspective? How do we bring our data and collect better data to translate to better outcomes for our customers?
So that tech enablement, that roadmap looks different at every one of our companies, but it has these elements and at entry and evaluating a platform, we're looking for opportunities like that. And if there's zero, is there potential for that, which is the case at some of our platforms as well, where we start with nothing.

[00:13:01] Sean Mooney: I really like what both of you shared there, and one, much as we read in the news every day that it's AI, AI, AI, chat GPT, perplexity, grok, you know, blah, blah, blah. We seem to get more and more calls every day for people. And so your point about how the people and the team, and it's not just the CEO, it's everyone, it's this holistic system that makes these companies work.
And I think that's really important because, the people are not going away, there's going to be changes. And I think everyone's got to embrace that. And it's going to embrace certain parts of organizations more than others, but still, it's the people that are making these businesses move and it's a huge part of what's impressive about things that your firm does.
The other thing that really kind of got my attention is talking about the unglamorous parts of these businesses that ultimately enable them to dance. And no one wants to talk about the data and the automation. They want to talk about neural networks right now. And it's interesting, every day we get a call from a really top private equity firm, and it starts with, let's talk about neural networks.
But very quickly and organically goes to, let's be thoughtful about the preconditions versus using buzzwords that sound great in a vacuum, but they're kind of just buzzwords. And so the way that you're describing is, let's get our data going. Let's visualize it. Let's analyze it. Let's do some automation.
That's where the biggest ROIs are that you can do now. And then you can use things like LLMs on the side.

[00:14:25] Ami Metha: Sometimes the foundation just isn't in place for you to pursue though. I mean, maybe that's part of the roadmap and we've engaged in those dialogues. We actually brought together all of our innovation product technology leaders in a council late last year in the fall.
And that was a big topic. It was, let's not talk about that until we have the infrastructure to support it. When we have data visibility, when we have ourselves organized and that in our stage, especially lower middle market in our sector sectors is top priority to get done. Those foundational elements are usually not in place.

[00:14:59] Sean Mooney: And I think it's a great lesson for any of the business builders that are listening to this, whether or not they're backed by private equity, or they hope to be, or someday, want to partner with a group like Periscope and bring in top notch kind of perspective and resources. It's this idea of like, be very deliberate, purposeful, thoughtful, and do the foundations first.
And then you're going to get massive ROIs. It's this concept that I think private equity is really good at. It's delayed gratification. Like, let's do things in a purposeful, step by step, one by one way. And then you get there with a much greater percentage chance of success versus kind of fueling up the rocket ship and hoping to reach orbit.
If one in 10 make it, that's a great thing. It's like, how about 10 and

[00:15:38] Joe McIlhattan: 10? And I think that aligns very well with our risk adjusted returns kind of philosophy. Periscope is pretty concentrated. I think that's something that differentiates private equity in general, especially like tech private equity versus VC is we have, five or six companies in a fund.
That doesn't allow for the one in 10 success rate. It lends itself much better to clear ROI, make all of them successful, invest in the right initiatives where you know there's a return. And frankly, we're going to take on risk through M& A, through trying to move fast, enter new markets, launch new products and services.
Let's make those the bets that we want to really take risk on and not on the tech infrastructure or the automation initiatives that we should be able to rely on.

[00:16:22] Ami Metha: Yeah. We're usually not working on proving out product market fit. That goes back to your initial comments, Joe, around that value prop. That's established.
It's just about accelerating share of wallet in both scope and scale.

[00:16:37] Sean Mooney: I think those are great points. And you're kind of highlighting in many ways, this concept, at least one of my favorite business books that I read, and we give to every one of our team members is the book of. Good to great for a list of both me and Joe and I both all kind of looked at each other and on me pointed to her bookshelf in her office and it's just such a great book.
And it's this idea that like there's these things that you can do. You can take these companies that are really good and you can make them great. And that's what I'm hearing these themes that you're talking about is like, get the right people on the bus and kind of do the aiming rounds and then be very data intensive and allow you to look at things and open about what the way the world is and then make choices, be better at fewer things.
And so, Joe, I'd be curious if you have maybe a couple examples within your portfolio of how you've kind of done that.

[00:17:25] Joe McIlhattan: Yeah, absolutely. I'll start with actually our first investment in our first fund, Uprise Health. I think it's a great example of kind of a classic archetype of how we look at investments.
It's an EAP provider, which people probably will recognize employee assistance program. The hotline telephone number you get from HR on your first day of work that says, if anything goes wrong, call this number and it puts them on kind of the front lines of mental health. And responding to employees in crisis, although, the origins of the issue may originate on plenty of different dynamics.
Broadly recognized, that's a relatively commoditized healthcare service. There are a lot of EAP providers out there, and we thought they were in the top ten. But what we did see was really durable customer relationships, a history that spanned decades, a large network of behavioral health providers that they could tap into for services, and something that demonstrated regular, repeatable ROI to their customers.

[00:18:24] Ami Metha: That mission, we talk about that as mission criticality, right?

[00:18:27] Joe McIlhattan: Exactly.

[00:18:29] Sean Mooney: So you saw that. You saw this great foundation. What were you able to use that foundation as kind of the basis to then build this and take this from probably a really good company to a great company?

[00:18:40] Ami Metha: Yeah, so it was a blend. And I think that if you think about Uprise at Inception, we've assembled the platform through M& A, but we've also invested in team, we've invested in process, we've invested in technology, both internal and external.
And so just to highlight some examples of that, the team today at Uprise looks immensely different from the team at inception because it has been a transformative investment. It's comprised of seven add on acquisitions. And so that scale and stage of the company then looks very different from where it is now.
And so that executive team build has been an ongoing effort. We're super excited about the team in place. So they're driving the business day to day in all aspects. I think from a strategy side, that tech enablement and infusing technology is creating a digital doorway for our members to reach the upright solution, reach the thousands of providers we have.
And that's been an intentional investment, but also upgrading the infrastructure and integrating all the, four distinct case management systems, different call centers, you know, there's a highly operational element of this business as well. The CEO of the business insists on our business is simple.
It's connecting a member to the right provider as a quickly and in as high quality of way as possible. That's it.

[00:20:08] Sean Mooney: I love that simplicity. What I'm hearing here is this consistent kind of thematic approach. You're kind of being the hedgehog, right? Like being better, fewer things and get the flywheel going.
And it's this idea that we're going to invest in team. We're going to invest in infrastructure. We're going to use technology for scalability, and then you're going to supercharge it with M& A. And enable you to then make these leapfrog jumps ahead. But what I really like what I'm hearing is this purposefulness, this deliberateness to get the basis right first, start in a great place, and then you can jump ahead.
And it seems like that's something there. Is that a good kind of sense of what I'm hearing?

[00:20:44] Ami Metha: I think so.

[00:20:46] Joe McIlhattan: Absolutely. I would just add that Uprise was a big digital led transformation. But the market around it also warranted it important context here were, they were going up against VC backed, well funded competitors who were changing the dynamic of competition a little bit, and it changed it from what was probably fundamentally a call center business at one point where the business model focused around, answering the phone and triaging cases.
To one that was entirely digital. And as Elmi alluded to, there are a lot of steps in making that transition, including, consolidation with other competitors that needed to make the jump as well.

[00:21:25] Sean Mooney: That sounds great. I appreciate it.

[00:21:27] Ami Metha: In terms of playbook, Sean, just a couple of topics to add there.
What Uprise also did and has become a quiver in our toolkit is. Just good lean process. They had to take distinct sort of disjointed processes and operations across seven different companies and bring them together into one plumbing system. So doing things like lean workouts, value stream mapping to take spaghetti and turn it into a fluid pipe is hard work that they did.
And marrying that with What are the outcomes we're after from a customer perspective? How can we measure whether we've achieved our goals with this operational work? It's a big part of the NPS, the utilization, the ultimate net retention, and growth of the company. That gets fueled by this experience.
And if you layer on the commercial growth, the organic growth, we are always looking to build out commercial engines at each and every one of our companies. So growth is sustainable. From an exit perspective, there's a history that's, we do put up good numbers from an organic perspective and building up that engine at each company looks a little different on how, but it's an important element.

[00:22:43] Sean Mooney: So you've common philosophies, but custom implementation based upon the nuances of the company. Yes. That makes a thousand percent sense. One of the things I'd also love Ami and Joe to get your thoughts on. In this new age, this more modern era of private equity, there's this symphony of motion that occurs.
It's not just kind of one thing. It's many things and it's all happening in motion. And no greater is that symphony apparent than when you look at how PE firms are working in this interplay between the deal teams, the ops teams, the portfolio company, leadership teams. I'd be really curious to learn more about how Periscope manages all of this interplay.
So maybe Ami, if you want to take a crack at that first. Sure.

[00:23:29] Ami Metha: Yeah, and this is core to why I'm personally here at Periscope, is it is so critical to get right. And both aspects are important. And I think that working together to create a seamless experience for a seller, for a CEO, for a team, for our Periscopers is part of the Valley Creation Solution.
It makes us. Accelerate value creation. We get to our outcomes faster and those outcomes are stronger by being more integrated. So there's both the inside Periscope cadences and there's the interplay with management team. And so the inside Periscope cadences are very intentional. Those go from weekly to quarterly to annual cadences.
And so we have a more standard workflows that are, Weekly staff meeting, but we also have things like weekly ops is a cadence that I conduct with our deal team leads where we calibrate on active initiatives across the portfolio, making sure on a weekly basis that we're driving the right activities.
That we're unblocking roadblocks together and then ultimately we're tracking to those goals that we're after and measuring impact from more of a strategic perspective. I'll let Joe chime in, but there's an important process that we do from an annual perspective. If you want to chat about our annual parkour reviews.

[00:24:57] Joe McIlhattan: Absolutely. And whereas I think the day to day is great for like perfect alignment so that regardless of who maybe a portfolio executive speaking with, they hear the same kind of story. Absolutely. And they hear the same objectives from the Periscope team. I think it's super important, but we can get to that place by having really good alignment on more of an annual basis, because we go through this process that we call annual Portco review, which is a very reflective and kind of open, honest dialogue about our objectives for each portfolio company and how we're performing against the thesis.
Yeah, it can be a multi hour exercise, but

[00:25:34] Ami Metha: it

[00:25:35] Joe McIlhattan: begins with reminding everyone what the thesis was, reminding everyone how the financial performance has been against objectives inside that thesis, what has gone well, what has gone not so well, where we were right, where we were wrong, and where we were surprised or had to adapt.
And putting that in the context of what we like to call the path to alpha, basically exit objectives and how close or how far we are. So that then everyone can align on the right value creation objectives, but also the right depth of involvement in the next three to 12 months and realizing, is the exit in sight, do we just have to wait and kind of hold tight?
Or is this one where we should really lean in and start getting, Ami and her team deeply involved to start driving certain initiatives.

[00:26:25] Sean Mooney: I heard a couple of things there that really kind of grabbed my attention. And it's one, this kind of constant interplay between kind of the one periscope, right?
There's different groups. You're all part of a team. You're having huddles, you're having scrums. You're maybe doing different things in concert with each other, just like you see in a company. And you're treating your company like a company you got together, you shared the information, you call break, and then you try to execute it better than the Chicago bears, but I'm just kidding.
This is coming from a Cleveland Browns fan. So no, but you execute it really well. And then you kind of come back together and you meet. And one of the things that also is, I think, probably surprisingly. unique in private equity is that then you look and you say, how'd it work? And I'll tell you across, my 20 years in private equity, there was nothing scarier than looking back at that original investment committee deck I put together because never once in 20 years, did we get there for the reasons we thought we would, we almost always got there because of.
In some ways, the systems that you talked about where you're constantly coming together, assessing and breaking, and then assessing and breaking and changing directions and going left and right. But what I really like about what I also heard here is that you're also not only doing those play by play adjustments, but having a deep period of introspection that would have caused me to have tremendous heart palpitations at the end of every one year.

[00:27:54] Ami Metha: It's putting accountability and transparency front and center. What did we underwrite? What was our thesis? How are we tracking against that thesis? Now, it's not to say that that thesis doesn't evolve over the course of an investment, right? But it's a very powerful aligning tool where and it also really helps to step out of the day to day and say, how are we doing?
And we'd love to chat about how we work with our portfolio companies. But that path to alpha then cascades to our efforts with our management teams. And the priorities that they're pursuing, how are they setting their annual plans? What should they be anchored around? And oftentimes that, what I've noticed just in the, time that's elapsed in the industry in PE, is the underwriting, maybe not the underwriting, but those exit milestones, are this like, hoarded secret, like, oh my gosh, what did they underwrite us to do?
Where we turn that on its head, and oftentimes, before we even close, it's In some platforms say, here are milestones we're after, are we aligned and what is our pathway there? And so during a diligence process, there's a very meaty planning process that's involved. Joe and the investments team outlines the thesis and the pillars, but it takes more than that to create alignment before you close a platform with a team, with a management team to know kind of where exactly we're headed.
We're working on deepening areas, and so I, how I help out is pre closes deepening areas of our diligence on those key value creation pillars with things like deep dives, functional assessments, things like that, to really map out a 180 day plan where. We're looking at that plan with founder CEO before we close, and that's as a full periscope team.
That's something that Joe and I have beat up together on the deals that we've worked on together. And so there's strong alignment. There's a connection between yes, this is what we're underwriting essentially in the investments we need to make. And socializing that engaging on that with founder CEO and members of the management team as appropriate so that there's a two way dialogue on that so that it gets them excited about their future, but it also creates that alignment and road map.
And we're talking about those exit milestones and stages, right? And then we race through the exit in terms of how the interplay represents itself with management teams. They're really at the front and center of executing the strategy. They're hands on in developing the strategy. We want it to be their strategy that they believe in.
So this is not a top down effort and that partnership and collaboration in the right ways versus being You know, a one size fits all or parachuting in and doing all, you know, raising the ground that approach seems to really resonate with our stage and scale of investments from a new platform perspective, but they're doing all the hard work, right?
That's why we're intentional about team, but that pre close planning aspect is critical to create that runway, create that alignment, and they're empowered on that execution plan. I

[00:31:01] Sean Mooney: think those were great examples of the business of private equity becoming more and more like a business. What I'm hearing is you have kind of these common philosophies, custom implementations, you have high level goals.
That you're meeting on, you're holding each other accountable on, and then you're cascading those goals down like, okay, ours all the way down through your organizations. And then I'd be curious, as you think about that interplay, you've got everything aligned, you've built buy in from the teams, you've probably changed your value creation plan a little bit, if not a lot sometimes, then how do you manage that interplay with the portfolio company?
Is this a, let's come to Chicago once a quarter for a board meeting or is there a regular interaction?

[00:31:43] Joe McIlhattan: I'd say we have both. And sometimes we take a little bit of a divide and conquer approach, uh, to some of those regular interactions to maybe cut down on necessary bandwidth from the team members, for the private equity ownership.
But when we take that approach, it might be the deal partner that meets weekly with the CEO. It might be the VP or the principal meeting every other week with the CFO on more financial topics. And it would be a me or a member of the ops team working with the CRO on go to market stuff or the COO on value stream mapping or lean Six Sigma workout, trying to all hit all facets of the business at the same time.

[00:32:22] Sean Mooney: Another example of comprehensive team based approach and then watching, all of this kind of cascade down in alignment. And so I very much appreciate that perspective and it shows that's how you build value today, the delegation and specializing in partnership. Is something that maybe in my early days in private equity worked, but in the modern era, you've proven with your results, how this comprehensive integrated approach is what the mandate is.
And you figure out a way to do it, extremely well. And so I think that's very enlightening. And certainly for anyone thinking about the private equity industry, this is a prime example of how it should be done when it's done well,

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[00:33:21] Sean Mooney: Maybe the next curiosity I have for both of you is The world that you're playing in, very often people think there's sass, and then there's industrial.
And what most people realize, A, you can use the word and not or, you can have blends. You can have a service business and you can have a technology business and you can fuse it to create a greater whole. How do you all think about that difference from maybe a SaaS business and a tech enabled service company?

[00:33:51] Joe McIlhattan: I think it's an interesting part of our ongoing staff meeting debates because we are always trying to define it perfectly. We do try to focus on just recurring professional service that has an element of technology. That can drive operating leverage, can differentiate it in the market, or can accelerate growth.
Proprietary used to be part of that definition. I think we've seen actually really good kind of off the shelf uses of technology in a proprietary manner. So we've expanded that definition a little bit. But fundamentally, these are people first businesses that harness innovation. To increase equity returns.

[00:34:32] Sean Mooney: And I think that's the right approach. And if you look back on maybe the last 15 years, and this is probably more of a commentary on the VC startup side, it was too much of a binary choice, meaning you can be a SAS and you're going to have no human experience in this thing. And if there's any customer service.
That is a huge no, no. And that would always frustrate the heck out of me, Joe, when you and I would look at software companies and you'd go, wait a minute, like, I know people think it needs to be, you know, completely robot driven, but you're leaving so much opportunity on the wayside because you haven't had the audacity to use the word and not, or, and use a fusion to create a greater whole.
And so I think what I'm hearing here is you're able to kind of see it doesn't have to be one or zero. It doesn't have to be this or that. There can be an and and you can do that really successfully.

[00:35:23] Joe McIlhattan: Yeah. And even though people can be a very frustrating part of the private equity investing process because you have to have a high emotional intelligence and fundamentally they walk out the door every day, they can be a source of differentiation in themselves.
And when they're part of the service, they can react to market changes much more quickly than you can get an agile workflow into your software development team and add new functionality and kind of go through the classic product roadmap piece. We can change the service pretty quickly. So you think about malleability or adaptability to help insulate you from product risk or service risk.
And if we can enter a market where there are kind of VC backed tech only competitors. It's a great way to differentiate and maybe a more hybrid customer service oriented approach and win long term, especially in the B to B context where we we most commonly participate.

[00:36:16] Ami Metha: And there are segments of clients that are looking for that that don't want the technology only experience.
And so there is market share out there for this offering. And so we debate about a lot, but we are all consistent on his mission criticality. That value prop needs to resonate. What is the service we're providing and it needs to have mission criticality. It needs to resonate. It needs to have product market fit.
And then you put the engines on top of it. Right. So theoretically, I mean, it all, it sounds more complicated. But it feels like it's more business 101, you know, uh, you put in good people management processes, you build out the culture to create a great place to work and those people stay and they flourish, and having the right talent really drives those outcomes.
We haven't talked as much about commercial build, but just one particular area, an example that we spend a lot of time on that maybe is a little bit more straightforward in a SaaS software business is account management, where Account management within our companies and building out that capability is something we spend a lot of time on, especially with the last couple of years where maybe people are slower at making decisions from a new local perspective, those engines are running and we build those as well, but.
Growing through net retention in our base, it's a huge win when you can do that successfully. So, installing a product features and upgrades into a product roadmap and releases might be the pathway, and having customer service might be the pathway from an account management perspective. But what do those customers need looks very different from a services perspective.
You have to understand their experience. You have to capture more white space within their own share of wallet. And you have to have those day to day customer service aspects, but you also have to understand health. You have to strategically plan and you have to get through that upcoming renewal because we're talking about renewal.
So that motion is something we spent a lot of time investing in pretty much at each and every one of our companies. To be really intentional about and to infuse data around as well. So that probably looks different from your more typical tech only business.

[00:38:29] Sean Mooney: And what I'm hearing you say, I mean, a lot of the things that we say, well, some of this is kind of common sense and business one on one, but it's also, that's the stuff that's really hard to do.
And it really makes a difference and it matters. And so what you're talking about, we all know that the best customers, the one you already have. What's hard about that is sometimes making that relationship much deeper and better, right? Some ways the easiest thing in the world is grab a new logo and you can shoot through your addressable market really quickly But what you're describing is like that hard stuff It's the stuff that matters and sometimes you don't want to do the thing But I think you are being very intentional about those And maybe with that in mind, I think another one of those areas where I think the industry has come a long way is this concept of culture, as I reflect back, you know, late nineties when I was starting in private equity, uh, culture was almost a bad word.
They're like, that sounds awful. Huggy, huggy, Sean. You know,

[00:39:20] Ami Metha: that sounds expensive.

[00:39:23] Sean Mooney: You're like, whoa, whoa, whoa. Just go take that, you know, take that hill kid. I'd be like, yes, sir. But I think it's really evolved to because the business has become about transforming companies. And this is something that's been occurring over decades, but really, really escalated over the last five years in private equity is the strategic appreciation and value of culture and how it makes such a big difference to the outcomes of your business and the satisfaction of the people who work for your companies, which then creates this flywheel effect driving outcomes.
And so I'd be curious, what are some of the ways that you all think about culture in your organizations?

[00:40:05] Joe McIlhattan: Well, I think we have started to try and filter for it up front on investments, especially in the M& A context, because when you have two fast growing, services or tech enabled services businesses, they're going to have powerful cultures because attracting, developing, retaining talent is part of their growth.
And so they could be pretty unique and distinctive. And it's our job as investors to at least see a path where they're somewhat aligned. And we try to filter for that upfront. And when it is aligned, we say so, and we get them both in the room and say, you guys both have the same values mission and are driven the same way.
We think it's going to really work well as a combination, but day one can be intimidating and it always comes with a lot of nervousness and anxiety on both sides of the employee base. So we've tried to be a little bit adaptable and creative in thinking through those a little bit more intentionally.
Right. The systems integration and the go to market integration, like those playbooks have been written and tested a few times, but cultural integrations, I think, is a little bit more of the forefront. One idea we used recently was sending about 40 of the top employees of two companies we were putting together, which was a meaningful number.
I want to say it was like 20 to 25 percent of the employee base to a executive leadership program at West Point called there. The Thayer method will be familiar to anyone who spent time in the U. S. military. It is not as intimidating as it sounds. It is not about seven mile runs in sweatsuits. That's only a small part of it.
Yeah,

[00:41:35] Ami Metha: it's

[00:41:36] Joe McIlhattan: part of it. That's really when you bond is when you're, you know, in the mud and rain and it's 50 degrees. No, it's more about just individual leadership and trusting one another, but I'll let Ami go into more detail. It's a really great program.

[00:41:49] Sean Mooney: Yeah. Give us the high level overview of what the program is and then what was the kind of the achievements that you saw

[00:41:55] Ami Metha: from it?
Yeah, it was a very, I mean, it was a transformational experience. I think that when you think about West Point, you think rigidity and you think top down, you think structure. And the program is self led at first with some virtual learning and then you go on site. And the first part of the program is very introspective.
Who are you? Yeah. Define your values and your leadership philosophy. Take time to do that, to understand yourself and what drives you so that you know how you can contribute to the greater company. And we all did that. We all wrote our own personal leadership philosophies. Mine, coincidentally, the center focus point is karma.
What you get from the universe is what you put in. So mine very much centers around outcome orientation is, can I enter each room and leave it better once I leave every interaction? And so how do you accomplish that? That's very core to mine, but that's kind of the starting structure of the program is defining that so that you can contribute and create a transparent dialogue.
And so your teammates understand you. We shared all of those philosophies together. That's a pretty tricky thing to say. Here's who I am. And that is both personal and professional. And we put that on paper and we shared the structure of the program is then to take you through various philosophies and various tools to create alignment, empowerment.
And execution against any sort of outcomes. You can take this toolkit and basically roll it out across anything. So you have to have strong intent for any objective that could be a new platform deal. That could be a random meeting. That is how I start any operational initiative. What is the outcome we're after and creating some connectivity or on a dialogue to confirm that intent.
How am I going to go about this? Well, I'm going to share that with you. You're going to reinforce and we're going to edit. And then there's a trust based communication there to understand that I'm fully powered to race and run. And we carry the ball for each other in a variety of ways. So it's that coordination, and it's also being introspective, like, you know, the annual Portco reviews, but like conducting after action reviews, or AARs, to say, how did that process go?
Did we achieve what we were looking for? What are the learnings, and how do we bake them in? To the next time we do this and indoctrinating those we have a folder on the drive for our AARs, but not to overshare because you should go do they or everyone, um, and pay for it because it's worth it, but we then took it and develop the firm's values and created the aggregation of everyone's individual values.
And there's this awesome word cloud that was developed. And that really generated our firm wide values, which now we all have a personal stamp on because it really was an aggregation of every periscoper. It was fun. We did do the, was it 6 AM or 5 30 workouts, carrying each other on stretchers, burpees, all of it.
It was a lot of fun.

[00:44:54] Sean Mooney: So Ami, I love what you said about taking the time to do your values. And I remember when I was starting BluWave just over seven years ago, I talked to a lot of people and it's like, what was one of the most important things you all did is you're building and growing your companies.
And they said, we got our values right early on. It was a hard process, but it was one of the best things we've done. And so, Joe, maybe I'd be curious, what did you all come up with as a result of this process in terms of Periscope's values?

[00:45:23] Joe McIlhattan: Yeah, absolutely. And this is after, not only the Thayer program, but a lot of introspection on our own leadership philosophies.
The word cloud, as Ami mentioned, of what were, the most common attributes and values of Periscopers, but we came up with six core values. Periscopers. And their growth, empathy, integrity, accountability, collaboration. I think everyone would probably say grit is their favorite, I hope, but it's just that part of, working in the lower middle market and working harder than the next guy to make the alpha that you need.

[00:46:03] Ami Metha: Right, and it was taking the time to define. What they had you do was what does this word mean to you and what it will it mean to someone else, take the time to define that. And so each of our values we discussed, what does growth mean? Well, it means embrace the challenges and create the solutions.
When we think about growth, that can be through having a growth mindset, through Something that's kind of tough or something that is amazingly exciting from a more literal growth perspective. Empathy. Empathy and P. E. What does that mean? Mutual understanding and respect drives those long lasting relationships.
And so that's with one another as periscopers, that's with our management teams. So how do we show up for them? And this is one that is really differentiated is the experience that Joe, deal team, others leave behind in first meeting a management team in a company presentation. What is that? They seem like really normal people, you know, or people that I'd want to work with who understand me, integrity as, as it sounds, but always do the right thing.
Of course, accountability, do what you say every single time. We had versions of that that was say equals do, say do equals 100. But we're really big on accountability around here. Collaboration, hopefully you kind of picked that up with our whole dialogue today, but we really believe that those team victories accomplish more than the individual shout outs.
It's, it's important to win together. And so that's how we approach every problem, set, or opportunity. And grit, it's just about over preparing, out working, and therefore out performing others, so it's that simple. That work element is something that we were really keen on bringing to the forefront, because it matters a lot.

[00:48:00] Sean Mooney: I really like those, and I'm not just saying that because they're pretty consistent with BluWave’s values. So, but those are fantastic, and if you do those things and you can do that consistently as a team, how do you not win? I really like your distillation there. I've learned a ton during this conversation, and every time I have one of these, I learn things I wish I knew before, and then every time we do something with Periscope or, another great firms like yours, it's like, I didn't know you could do that.
And so I have had this lifetime of, in the BluWave era of my life, of all these, I wish I knew these things before. And I just think we all have those. And so I'm curious, Ami and Joe, if you were to go back to your 22 year old selves and give yourself a piece of advice that you wish you knew then, what would be one of those nuggets of wisdom?
So Ami, maybe we'll kick off with you.

[00:48:55] Ami Metha: Yeah, absolutely. I think, just speaking to all the hardworking women out there, the advice I'd give myself at the age of 22 is Yes, you can have it all, but not possibly maybe all at the same time or, you know, even to whittle that down on the same day, right?
So you have to be okay with having some patience for yourself and saying, today I was an A at work. And it's okay if I'm a B at home, possibly, because I'm getting home late, or whatever the case may be, I have three young kids at home, so that dichotomy is very active in my mind, but vice versa might be true sometimes, where I showed up to all the things, yesterday, today, this week, and, you know, Maybe I need to get creative about how to be that rock star at work because for high caliber women and, you have to know and trust that you're a rock star and you're still going to average out to that rock star.
It was very relieving to kind of understand that it doesn't need to be on full throttle every day because, you know, I'm type A. So, um, there you have it. And one more that is more focused on learnings from my time at Periscope. Steve himself has kind of helped me with this journey, which is we have semi annual reviews, annual reviews here at Periscope.
We're very structured about that and love to invest in people development. He says, be loud, be louder, be louder before this podcast, loud and proud of me. And it's something that as a woman, sometimes you have to learn, is that it's okay to sometimes not be the most polite person or Wait your turn, but make your presence known, make your thoughts known, and do that at every opportunity you can.
And try to learn that faster versus slower. It really helps a lot, it's just Be loud as it has helped a lot.

[00:50:48] Sean Mooney: That's a great piece of advice in life. And it's this idea, life's it's just marathon run and you're not always going to be, running all out. And if you are, you're going to lose the race.
So you got to pace yourself. You're going to get there. And this idea that you've earned the right to have a perspective. So use it. You're never going to always be right, but if you don't try, who knows? And so give yourself that grace. And those are both things I just wrote down on the side here, by the way.
Great piece of advice. So Joe, what do you have for us?

[00:51:15] Joe McIlhattan: Yeah, I think similarly with that marathon approach, but maybe a little bit more focused on skills. I think, for all the aspiring private equity professionals out there, I would say something around just being patient and look around you and try to gather the skills that you can in other roles.
For everyone, that has private equity ambitions, they're always thinking about it as the ultimate exit opportunity, but it's a lifelong skill that people gain. And I think everyone in the industry would agree with that, that you never stop learning and trying to be a better investor, and I think the places where you can gather skills that are applicable here are really broad, whether that's consulting or banking or sales or marketing, there are skills out there that you could bring to a investment.
Or to a value creation plan to generate alpha. And I think it's kind of keep an open mind and be patient until you get here.

[00:52:07] Sean Mooney: I think another pearl of wisdom, right? It's a, we're on this journey. It's not a destination. And maybe some of the angst that I would feel when I was in the same shoes as you all was like, I never felt like I was crossing a finish line.
And then at some point I realized that, no, that's part of the fun is that you're never going to get to Rome, but it's a really beautiful walk through the Italian countryside getting there. And so why not join it? And I'm not just saying that because I tried to go to Italy again this summer, but it's sold

[00:52:36] Ami Metha: out already.
You and everyone else.

[00:52:39] Sean Mooney: Next summer, I'm going to do it and then I'll be able to personify what we're just talking about here. So. I mean, Joe, I've really enjoyed our conversation. I've learned a ton and very much appreciate the opportunity to not only know you all, but also benefit from some of your wisdom that you've shared here today.
So thanks so much.

[00:53:00] Joe McIlhattan: Thank you, Sean. It was great coming on the podcast. Yeah.

[00:53:03] Ami Metha: Thanks for having us. It was fun.

[00:53:06] Sean Mooney: Absolutely. Thanks so much. That's all we have for today. Special thanks to Joe and Ami for joining. If you'd like to learn more about Ami and Joe and Periscope Equity, please see the episode notes for links.
Please continue to look for the Karma School of Business podcast anywhere you find your favorite podcasts. We truly appreciate your support. If you like what you hear, please follow, rate, review, and share. It really helps us when you do this, so thank you in advance. In the meantime, if you need to be connected with the world's best in class, private equity grade professional service providers, independent consultants, interim executives, or anything else, give us a call or visit our website at BluWave.
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Private equity insights for and with top business builders, including investors, operators, executives and industry thought leaders. The Karma School of Business Podcast goes behind the scenes of PE, talking about business best practices and real-time industry trends. You'll learn from leading professionals and visionary business executives who will help you take action and enhance your life, whether you’re at a PE firm, a portco or a private or public company.

BluWave Founder & CEO Sean Mooney hosts the Private Equity Karma School of Business Podcast. BluWave is the business builders’ network for private equity grade due diligence and value creation needs.